BIOS

Oil floats in the water near a home in Lago Agrio, Ecuador, Aug. 4, 2008. (AP / Dolores Ochoa)

The Canadian Press
Published Thursday, May 2, 2013 7:16AM EDT
Last Updated Thursday, May 2, 2013 8:28AM EDT

TORONTO -- A long-standing legal battle between a group of Ecuadorian villagers and multinational oil giant Chevron Corp. over whether its Canadian subsidiary should be on the hook for a US$19-billion judgement has been dismissed by the Ontario Superior Court.

In a 37-page decision Wednesday, Justice David Brown stayed the action, but ruled that the Canadian courts have no jurisdiction to enforce the controversial award handed down by an Ecuadorian court against Chevron.

"The evidence disclosed that there is nothing in Ontario to fight over. Ontario courts should be reluctant to dedicate their resources to disputes where, in dollar and cents terms, there is nothing to fight over," said the ruling.

"In my view, the parties should take their fight elsewhere to some jurisdiction where any ultimate recognition of the Ecuadorian judgment will have a practical effect."

Brown concluded that the judgement was levied against Chevron Corp., and not Chevron Canada, therefore the subsidiary's assets do not belong to the U.S. parent company, and should not be subjected to the foreign court ruling.

The villagers had argued that Chevron Canada has billions of dollars in assets it could use to pay the judgment. But the ruling found that there is no connection between the parent company and the subsidary, which operates independently.

"The plaintiffs have no hope of success in their assertion that the corporate veil of Chevron Canada should be pierced and ignored so that its assets become exigible to satisfy a judgment against its ultimate parent," wrote Brown. "There is no basis in law or fact for such a claim."

The award to the villagers was made in Ecuador for black sludge contamination of a rainforest between 1972 and 1990 by Texaco, which Chevron Corp. bought in 2001. Chevron Corp. maintains it won't pay because it contends Texaco dealt with the problem before it was bought.

The villagers launched the court action in Canada last May, and started similar arguments in Argentina and Brazil.

Brown also ruled that he hoped the two sides could attempt to settle their legal costs.

Chevron said it was pleased with the court decision.

"This is a significant setback to the Ecuadorian plaintiffs' worldwide enforcement strategy given that it is premised on seeking to enforce the judgment against assets of Chevron Corporation subsidiaries that were not even parties to the Ecuadorian litigation," said Chevron spokesman Justin Higgs in an email.

"The plaintiffs should be seeking enforcement in the United States -- where Chevron Corporation resides. In the U.S., however, they would be confronted by the fact that eight federal courts have already found the Ecuador trial tainted by fraud."

The Ecuadorian case has been plagued with allegations of fraud and corruption, even though it has not been proven in court.

A lawyer for the plaintiffs in Canada could not be immediately reached.

The Supreme Court has previously ruled that foreign judgments are only enforceable in Canada as long as there is a "real and substantive connection" between the foreign jurisdiction and the subject matter of the claim.